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What happens if the underlying of a 3x ETF drops more than 33% in a day?
- Thread starter 1a2b3cppp
- Start date
The only thing I can think of is an emergency reverse split if something like that happened.
If the crash happened too fast for a reverse split to be done-- it would probably go to zero or 1 cent and then be split the next day.
I dont think it could go less than zero. An ETF cant have a negative value, can it?
In either case you would probably lose all your money. But at least its safer than futures, where in a bad enough crash you could end up owing money to your broker....
If the crash happened too fast for a reverse split to be done-- it would probably go to zero or 1 cent and then be split the next day.
I dont think it could go less than zero. An ETF cant have a negative value, can it?
In either case you would probably lose all your money. But at least its safer than futures, where in a bad enough crash you could end up owing money to your broker....
Quote from Ol' Yella:
The only thing I can think of is an emergency reverse split if something like that happened.
If the crash happened too fast for a reverse split to be done-- it would probably go to zero or 1 cent and then be split the next day.
I dont think it could go less than zero. An ETF cant have a negative value, can it?
In either case you would probably lose all your money. But at least its safer than futures, where in a bad enough crash you could end up owing money to your broker....
+1. no, an etf can't have a negative price just like a stock can't although at one point i thought VG would after it kept dropping after it's IPO lol.
read the prospectus.
XIV will liquidate in case of 2008 crash for example. no more XIV!
rules will differ.
XIV will liquidate in case of 2008 crash for example. no more XIV!
rules will differ.